Bega trumpets Vegemite revival but milk shortage sinks shares

afr.com:

The executive chairman of Bega Group says it is on the right path by tilting its business further towards branded pantry products such as Vegemite and Dare iced coffee, in a bid to restore its fortunes after the share price halved in two years.

Barry Irvin said a shortage of milk produced in Australia had dented profit margins as industry players scrambled for the limited supply from farm gates at a time when global dairy commodity prices were tumbling.

“It gives nobody any pleasure to see the share price where it is,” Mr Irvin said at the group’s annual meeting on Tuesday. Bega shares were above $6 in June 2021 but are now sitting below $3.

Vegemite volumes grew for only the second year in the past two decades in a plus for owner Bega Cheese. 

But the Vegemite brand, which Bega acquired in 2017 for $460 million from global food giant Mondelez International, had one of its best years in two decades. Vegemite is celebrating its 100th anniversary this year, which helped increase growth by almost twice the rate of the broader $700 million spreads category. That category alone grew 5 per cent in 2022-23.

Bega chief executive Pete Findlay said Vegemite’s annual volumes in 2022-23 had increased for only the second time in the past 20 years.

He said the historic brands in the company’s stable, which also include Farmers Union iced coffee, Dairy Farmers and Bega cheese, were more than 100 years old and had all increased volume and value.

The branded business would “counter the headwinds” facing the commodity business in 2023-24 somewhat, but the group overall was still expecting normalised earnings before interest, tax, depreciation and amortisation to be “relatively flat” at between $160 million and $170 million.

Mr Irvin was